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News from The Hilltop Institute at UMBC

Hilltop Releases Final Report in Series on Medicare/Medicaid Cross-Payer Effects

The Hilltop Institute has released a new report entitled, Cross-Payer Effects on Medicare Resource Use: Lessons for Medicaid Administrators. The report, authored by Anthony M. Tucker, PhD, and Karen E. Johnson, MS, is the fourth and final report in a series that explores the cross-payer effects of providing Medicaid long-term supports and services (LTSS) on Medicare acute care resource use. The report provides a summary of the initial work of a study, described more fully in the first three reports, with an emphasis on lessons that state Medicaid administrators should consider as they move toward more formal programs of integrated care for persons dually eligible for Medicare and Medicaid (or duals, for short).

The second report, Examining Rate Setting for Medicaid Managed Long-Term Care, examined overall patterns of resource use in further detail, including the presentation and simulation of a rate setting system to cover the Medicaid portion of costs associated with coordinated care in an integrated Medicaid and Medicare environment. The relationship between risk adjustment based on CMS Hierarchical Condition Categories that is used to establish payments to Medicare Advantage plans and Medicaid resource use is also explored.

There is considerable value and potential in examining Medicare and Medicaid resource use together to support better managed and/or coordinated care.

The nature and pattern of Medicaid resource use and costs for dually eligible recipients is significantly different from that for primary/acute care under Medicare in that, once an individual begins to use (Medicaid) support services, he or she will tend to continue to do so as part of a broader process of disablement rather than exhibit more episodic use of services. This has important implications for how Medicaid capitation rates are implemented for LTSS.

There is clear evidence that Medicaid LTSS tend to offset Medicare resource use overall in ways that should be examined and accounted for in the consideration of Medicaid program payments, particularly as states move to more fully integrated payment scenarios for acute care and LTSS.

The overarching study, Medicaid Long-Term Care Programs: Simulating Rate Setting and Cross-Payer Effects, which focuses primarily on issues related to setting Medicaid payment rates, was conducted by Hilltop on behalf of the Maryland Department of Health and Mental Hygiene with funding support from the Robert Wood Johnson Foundation Changes in Health Care Financing and Organization (HCFO) initiative (Grant # 63756). Although based on Maryland data alone, the broader objective of the reports drawn from this study is to provide administrators and analysts across states and at the federal level with a framework and background to approach analyses that integrate Medicare and Medicaid resource use. The results of this project support the need for new models of payment across payers for duals, envisioned by the new demonstration waiver authority and the new office for dual eligibles that were created under the recently enacted federal health reform law, the Patient Protection and Affordable Care Act.

The Hilltop Institute at the University of Maryland, Baltimore County (UMBC) is a nationally recognized research center dedicated to advancing the health and wellbeing of vulnerable populations. Hilltop conducts research, analysis, and evaluations on behalf of government agencies, foundations, and other non-profit organizations at the national, state, and local levels.